Taking stock

For the first time since the Second World War both of the candidates in a US presidential election will be campaigning on a platform critical of global trade. Across Europe, populist parties with protectionist trade policies are gaining ground. In the recent referendum on UK membership of the EU, voters chose limits on immigration over free trade with their neighbours. Who, then, is left to speak up for the idea of global trade?

On paper, Roberto Azevêdo, director-general of the World Trade Organisation (WTO), should be that person. But, as he discovered when he politely suggested that the UK might be worse off outside the EU, a Brazilian diplomat living in Geneva and heading an unelected global institution is not always heard. Still, as Donald Trump suggests that he may pull the US out of the “disastrous” WTO, Azevêdo is aware that the case needs to be made.

Monocle: You were quite clear about the consequences of the UK leaving the EU. Are you surprised that no one took those warnings seriously?
Roberto Azevêdo: I am surprised that there were a lot of misunderstandings about what leaving the EU meant.

M: How difficult will trade negotiations be?
RA: There are no precedents for what is happening now. We are going to have a member of the WTO who, once they leave the EU, will have no “schedule of commitments”. This is a paper that lists your obligations. For example, levels of tariffs, the quotas for food production and so on.

M: How long could it take before the UK has trade agreements with every nation?
RA: It’s difficult to tell. The resources for negotiations are limited because members have a certain number of experts who can actually go to the table and negotiate a trade agreement, which is an extremely complex exercise. Many of the WTO members have their own priorities now. To stop everything they are doing and allocate people to negotiate an agreement with another member is not an easy decision. It’s unpredictable. It could take less than 10 years, it could take more. We are in the dark, trying to figure out what could happen. It’s a nightmare.

M: A prominent Leave campaigner said: “I think we’ve heard enough from experts now.” Does that concern you?
RA: It’s tough to listen to experts and take their word at face value but the reality is that they’re called experts for a reason. They know what they’re talking about and it would be wise to listen to them. You may not agree with what they’re saying but I think listening to experts leads to informed decisions.

M: In the US, both of the presidential candidates have been critical of trade agreements.
RA: I worry about this. My concern is that some of the things that I hear in campaigns everywhere in the world – not just in the US – are catchy slogans that are easy to sell but from an economic perspective, not necessarily sound. This rhetoric could be the platform for policies that could affect the global economy in a negative way.

M: Protectionism appears to be on the rise across the world. Does that concern you?
RA: Every successful economic model has had a high degree of openness and engages with others. I just don’t know any closed system that’s succeeded.

M: Can more be done to promote the idea of global trade?
RA: We need to do more to explain how global trade affects people’s lives every single day. I don’t think we do that enough because we take it for granted. You have to trade if you want to grow, if you want to develop and if you want a place in the world. But there are sometimes mis-perceptions and we have to back up these assertions with facts and numbers just to prove that what we are saying is founded on the truth. Let the other side dispute; I would really have fun looking at the other side saying that trade is, overall, a negative for the economy.